Linkage effects of CO% emission and energy consumption of Taiwan's steel industry

Transcription

1 Linkage effects of CO% emission and energy consumption of Taiwan's steel industry Jeng F. Lee*, Charles D. Lewis\ Sue J. Lin* 1 Dept. of Environmental Engineering, National Cheng-Kung University, 70101, Tainan, Taiwan. tl5197@mailncku.edu.tw 2 Dept. of Resources Engineering, National Cheng-Kung University, 70101, Tainan, Taiwan. Abstract CC>2 reduction is a primary concern for both developed and developing countries in order to adhere to the guidelines of the Framework Convention on Climate Change. Input-output modeling is used to assess the linkage effects of CO% emission and energy consumption of the steel industry in Taiwan. Also, we calculate the amount of CO: emission from a proposed new steel plant project, "Yeah-Long", in Taiwan, and find that the new plant will emit over 13 million tons CO: per year, which is almost 57% of total CO: emitted from all steel industries of Taiwan in This study also concludes that the steel industry generally has very high CO: and energy multipliers, which indicates this industry induces large amounts of direct and indirect energy consumption and CO: emissions in Taiwan: this will make the task of CO: reduction in Taiwan even more difficult. 1 Introduction Taiwan's steel industry is one of its primary industries with high inter-industrial linkage effects. For the past four decades, it has provided a significant contribution to Taiwan's economic development. According to forecasts by China Steel Corporation, the steel demand in Taiwan for 2001 will be 28,426 thousand metric tons.* However, the total production of steel in 1996 was only 17,120 thousand metric tons." Therefore, it is expected that the steel industry

2 102 Air Pollution will continue to play an important role in Taiwan's economic development. Although the steel industry is economically important, the production of iron and steel consumes large amounts of energy, and fuel combustion releases large amounts of CO:. CO] reduction has been a primary concern for both developed and developing countries in order to fit into the guidelines of the Framework Convention on Climate Change. In December, 1997, the third session conference of FCCC covenant countries was held in Kyoto, Japan. In this conference, the Kyoto Protocol was signed to request the reduction of global CO] emission. Consequently, CO] reduction has become an unavoidable task in the future for many countries. In dealing with modeling, Leontief' initiated input-output (I-O) analysis for computing pollutant emission and evaluating control strategies for major industries in the United States. An input-output model and linear programming for evaluating air pollution control alternatives was developed by Low*. Han and Lakshmanan* applied the hybrid-unit input-output system to analyze the structure changes on energy intensity in Japan for 1975 to In addition, Hawdon and Pearson* used a 10-sector input-output model structure based on interrelationships between energy, environment and economic welfare to estimate the air pollution emission coefficients in the United Kingdom. This study differs from the above studies in that it uses an integrated approach, including total emission amount, direct CO] coefficient, and multiplier analysis, to assess the linkage effects of CO] emission and energy consumption of the steel industry in Taiwan. Moreover, this study calculates the amount of CO] emission from a proposed new steel plant project, "Yeah-Long", in Taiwan and assesses its impact on Taiwan's CO] emission. 2 Methods 2.1 Input-Output Analysis Input-output analysis is a quantitative method used to analyze mutual interrelationships among various sectors in an economic system. Each sector's production process can be represented by a vector of structural coefficients that describes the relationship between the input it absorbs and the output it produces. Leontief * indicated that the inter-dependence between the sectors of a given economic system can be defined by a set of linear equations to express the balances between the total input and the aggregate output of each product and service. The basic equations of the input-output model can be presented as: X u + Fi = X i (1) j=i f Xu+ Vj= Xj (2)

3 Air Pollution 103 Sa«jXj+ Fi - Xi (3) j=i where, Xj = total gross output produced in sector i Xj = total gross input required in sector j Fj = product of sector i delivered to the final demand Vj = final payment (value added) by sector j Xjj = product amount of sector i used by per unit output of sector j ajj = Xjj/Xj, the direct input of sector i into sector j Thus, the technical structure of the entire system can be represented by the matrix of technical input-output coefficients of all its sectors. Eqn. (3) can be rewritten in the following matrix form: AX+F=X (4) (I-A)X=F (5) or X=(I-A)-'F=[b j]f (6) where, A = direct input coefficient matrix ofay I = identity matrix (I-A)"*= Leontief inverse matrix bj, = total direct and indirect requirement of sector i by per unit output of sector j tofinaldemand. 2.2 Pollution and Energy Multipliers As pollution is regarded as the "externality" of regular economic activities, many forms of pollutant emission can be related in a measurable way to energy consumption or production processes. In this study, the "externalities" are incorporated into the conventional input-output model in order to respond to the environmental effects of energy consumption by industrial processes, and CC>2 is used to evaluate relationships between pollutant emission and steel production. The energy multiplier was first applied by Wright' for defining the energy commodity in input-output analysis. Also, Miller and Blair* elaborated the energy and environmental input-output model to quantify the total impact of energy commodity input coefficients and pollutant output coefficients. In this study, the total impact of the CO: coefficient and the energy coefficient were calculated by the following equations: P =P (I-D)-' (7) E =E (I-D)-' (8) where, E = total impact of energy coefficient, which specifies the amount of energy

4 104 Air Pollution required directly and indirectly by per one million worth of final demand of industry j (10^ kcal/million NTS). P = total impact of pollution coefficient, which specifies the amount of pollutant emitted directly and indirectly caused by per one million worth offinaldemand of industry j (ton/million NTS). g = energy coefficient, which specifies the amount of energy required directly by per one million worth of output of industry j (10* kcal/million NTS). p = pollution coefficient, which specifies the amount of pollutant emitted directly caused by per one million worth of output of industry j (ton/million NTS). (I-D)"'= Leontief inverse matrix for the domestic portion 3 Results and Discussion 3.1 Trends of Energy Consumption and CO% Emission Figure 1. shows the yearly energy consumption of the steel industry from 1981 through 1996 in Taiwan. The total energy consumption has been steadily increasing. In 1981, the amount of energy consumed by the steel industry is 1,385,590 X 10* kcal, and it is 6,339,662 X 10* kcal in 1997*. The growth rate in this period is 358%, and the yearly average growth rate is 9.97%. For four kinds of fuel, the coal consumption trend is similar to the total energy. The coal consumption growth rate between 1981 and 1997 is 473%, and the yearly average growth rate is 11.53%. The energy structures for the steel industry in 1981 and 1997 are shown in Table 1. In 1981, the consumption ratio for coal is 63%, and oil is 23%. However, the coal ratio grew to 79%, and oil declined to 10% in This indicates that coal has been the primary fuel for this industry, and the ratio is continuously increasing. coal oil Year -electricity gas total energy Figure 1. Energy consumption of the steel industry from

5 Air Pollution 105 Table 1. Energy structure for Taiwan's steel industry in 1981 and 1997 Year coal 62.8% 78.6% oil 22.8% 10.1% electricity 14.3% 9.3% gas 0.1% 2.0% 'vt g' : I % Year total energy -coal -oil -elec. Figure 2. CO? emission of the steel industry in Taiwan from Carbon dioxide (CO:), which is a major cause of the greenhouse effect, is mainly emitted by fossil fuel combustion. In 1 997, the amount of CO: emitted from the steel industry is 23,135 thousand tons, which is 12.7% of the total CO: emission in Taiwan. According to Lin (1997), the steel industry is second only to transportation (15.5%) in terms of CO: emission sources in Taiwan. Therefore, this industry is one of the important targets for CO: reduction in Taiwan. Figure 2 shows the CO: emission trends of four kinds of fuel: coal, oil, electricity and gas, of the steel industry from 1981 through It is evident that coal combustion is the primary source of CO: emission from the steel industry, and the ratio is continuously growing. CO: emitted from coal combustion is responsible for 61.3% of the total amount emitted from the steel industry in 1981 and 73.2% in Energy and CO: Coefficient The energy coefficients, which means the amount of direct energy input per unit of production value, of the steel industry for the past 1 5 years are computed and listed in Table 2. The energy coefficient of the steel industry in 1981 was 8.03 X 10* (kcal/million NTS), however, it grew to X10? (kcal/million NTS) in Why the energy coefficient increased is probably due to this industry's need for more energy to produce its products, and the product value has

6 106 Air Pollution decreased. During 1989 through 1994, the energy coefficient declined from X10? (kcal/million NTS) to 9.27 X 10* (kcal/million NTS). However, Table 2. also indicates that its rank among 34 industries was 7th in 1994, which implies that steel is a high energy-consumptive industry compared to other industries in Taiwan. So the necessary strategies for improving energy efficiency and increasing product value-added of this industry should be enhanced in the future. Table 2. Energy and COz coefficients of the steel industry during ^"^ ^Coefficient Year ^^^ energy (10' kcal/million 8.03(10) 8.70( 7) 10.49(8) 13.59(5) 10.92(7) 9.27( 7) NTS) COz (tons/million NTS) 32.58( 8) 34.00( 6) 37.09( 6) 49.77( 4) 39.84( 5) 34.28( 5) Table 2. also shows the COz coefficients, which means the amount of CO% emission per unit of production value, of the steel industry from 1981 to During 1981 through 1989, the COz coefficient increased. Then, during 1989 to 1994, the COz coefficient declined from (tons/million NTS) to (tons/million NTS). Although the CO; emission intensity of the steel industry has declined since 1989, the rank of its COz coefficients among 34 industries is still too high. In 1994, the steel industry ranked fifth among 34 industries. Obviously, the steel industry is one of the industries with high COz emission intensity in Taiwan. Figure 1. shows that coal, with a high carbon-content, has been the primary energy source used by the steel industry, and this is also why the steel industry has a high COz coefficient. 3.3 Linkage Effects of Energy and CO; Multipliers The energy multiplier is different from the energy coefficient in that the former means the total energy consumption per unit of final demand for the steel industry's products. This includes the energy consumed directly by the steel industry and indirect energy consumption caused by inter-industry linkage effects of the steel industry. Like the energy multiplier, the CO: multiplier also considers the COz emission caused by inter-industry linkage effects of the steel industry. Therefore, the multiplier is more suitable than the direct coefficient as an impact index of energy consumption and COz emission of an industry. In this paper, we use multiplier analysis to quantify the coupling effects of energy consumption and COz emission of the steel industry. Energy and COz multipliers of the steel industry during are computed and listed in Table 3. It is noted that the steel industry had the highest

7 Air Pollution 107 energy multiplier in 1989: X1(T kcal of energy was consumed per one million NTS of steel industry's final demand, including X10? kcal of energy consumed directly by the steel industry itself and 8.78 X 10^ kcal by the related industries of steel. Obviously, the inter-industry linkage effect is very significant. Like the energy coefficient, the rankings were always in the top 10 for a total of 34 industries. Table 3. Energy and COz multipliers of the steel industry during *"* ^Multiplier Year -^ energy (lo^kcal/millionnts) 18.18(10) 18.18( 9) 19.10( 7) 22.37( 5) 18.52( 7) 17.06( 8) COz (tons/million NTS) ( 7) ( 6) ( 4) 81.71(4) ( 4) ( 5) The COz multiplier can show the entire COz emission intensity of the steel industry, including COz emitted directly from the steel industry and indirect emission causing by the inter-industry linkage effect of steel. Table 3. shows that the steel industry had the highest COz emission intensity in Although the multiplier declined, it remained in the top 5. This implies that the steel industry has been one of the industries with high COz emission intensity. A high COz coefficient and high inter-industry linkage effect are two reasons for the high COz multiplier of the steel industry. 3.4 Impact of COz emission from "Yeah-Long steel plant project" The "Yeah-Long" steel plant, which is still undergoing environmental impact assessment, is the primary investment project for steel plants in Taiwan. This steel plant is designed to produce 7,530 thousand tons of steel per year. The estimated annual amount of energy consumption is 40,194x 10* kcal, which is 63% of the entire energy consumption of the steel industry in 1997, including 28,676x 10* kcal of coal. Based on the energy consumption, we calculated the amount of COz emission from this steel plant with IPCC method. Results listed in Table 4 indicate that 13,132 thousand tons of COz, which is 57% of the total COz emission of the steel industry in 1997, will be emitted from this plant. This will result in a significant increase of COz emission from the steel industry in Taiwan. Furthermore, if we take the inter-industrial linkage effect of steel into consideration, the coupling effects of energy consumption and COz emission will be double that of the steel itself. That is, this project will induce large amounts of direct and indirect energy consumption and COz emissions in Taiwan, and will make the task of COz reduction in Taiwan even more difficult.

8 108 Air Pollution Table 4. CO: emission and related parameters from the new steel plant Items Yeah-Long Steel industry (1997) Production capacity (thousand tons) Total energy consumption (10'kcal) Total CO: emission (thousand tons) 7, ,019, ,132 «> 16,415 (=) 6,339,662 ^ Notes: 1. El A Report for Pin-Nan Industrial Area Development (1997)* 2. Taiwan Steel and Iron Industries Association (1998) 3. Energy Commission, Ministry of Economic Affairs, Taiwan (1988) 4. Calculated by this study 4. Conclusion This study uses input-output modeling to assess the linkage effects of CO2 emission and energy consumption of the steel industry in Taiwan. Results find that among four kinds of fuel, coal consumption grew 473% between 1981 and 1997, and is the primary factor causing increased CO: emission from the steel industry. The amount of CO: emission of the steel industry in 1997 was 12.7% of the total Taiwan emission, thus, the steel industry has become one of the major CO: emission sources in Taiwan. Based on energy and CO: coefficients, the highest CO: emission intensity in 1989 was due to the decline of energy coefficient. Although energy efficiency was improved after 1989, the CO: coefficient of the steel industry still ranked 5th among 34 industries. Results from multiplier analysis indicate that the amount of total energy consumption is much larger than the amount of energy used directly by steel. During , the indirect energy consumption due to high interindustrial linkage effects was 39.2% 55.8% of the total (direct and indirect) energy consumption of steel. The indirect CO: emission was 39.1% 50.6% of the total (direct and indirect) CO: emission of steel. That is, due to the high inter-industrial linkage effect, the steel industry can nearly double the amount of energy consumption and CO: emission. The amount of CO: emitted directly from the newly proposed steel plant, "Yeah-Long", will be 69% of the total emission of the whole steel industry in Besides, results of multiplier analysis indicate that the indirect amount of CO: emission would be 80% of the direct emission. Therefore, if this steel plant is built, the increased CO: effect resulting from this plant will be nearly double the amount emitted directly from this plant. Obviously, this will make the CO: reduction task in Taiwan more difficult. A study of the inter-industry linkage effects in Taiwan has shown that the steel industry ranks second among 34 industries in Taiwan, which indicates that the steel industry will continue to play an important role in Taiwan's industry and economic system, e.g. Lin/' Yet the steel industry has the characteristics of high

9 Air Pollution 109 energy consumption and high CO: emission. The policy implication from this study, in terms of CC>2 reduction would be to enhance regulation and technology for better energy efficiency and to amend CO% reduction and fuel mix to low-carbon fuels for newly proposed plants with high energy consumption and high CC>2 emission. The methodology used in this study can also be applied to other industries to provide some policy guidance for energy efficiency and air pollution control. Acknowledgement: The authors appreciate the funding from the Nation Science Council, Taiwan, R.O.C. for this research. Reference 1.Taiwan Steel and Iron Industries Association, The middle-period supplydemand forecasting of steel in Taiwan, Information Center of Steel and Iron Industries Association, <in Chinese> 2. Taiwan Steel and Iron Industries Association, Inter-industrial structure of the steel and iron industry in Taiwan, Information Center of Steel and Iron Industries Association, <in Chinese> 3. Leontief, W., Environmental repercussions and the economic structure: an input-output approach, Review of Economics and Statistics, 52, pp , Low, P., Pricing problem in an input-output approach to environmental protection, Review ofeconomics and Statistics, 61, pp , Han, X. & Lakshmanan T. K., Structural changes and energy consumption in the Japanese economy : an input-output analysis, Energy Journal, 15, pp , Hawdon, D. & Pearson, P., Input-output simulations of energy, environment, economy interactions in the U. K., Energy Economics, 17, pp , Wright, D., Energy budgets 3. Goods and services: an input-output analysis, Energy Policy, 2, pp , Miller, R. E. & Blair, P. D., Input-Output Analysis Foundation and Extensions, Englewood Cliffs, New Jersey: Prentice-Hall, Energy Commission, Taiwan Energy Balance Sheets Year Taipei, Taiwan: Ministry of Economic Affairs, <in Chinese> 1 0. Yeah-Long Steel Corp., EIA Report for Pin-Nan Industrial Area Development, Lin, Sue J., Chang, Yih F., Linkage effects and environmental impacts from oil consumption industries in Taiwan, Journal of Environmental Management, 49, pp , 1997.